Study claims big Chula Vista reserves

Study claims big Chula Vista reserves
The city says the funds are restricted, can’t be used to avoid cuts in servces
By Wendy Fry
December 26, 2010

Calling plans to slash public services disgraceful, an economist hired by Chula Vista’s police union performed a study of the city’s financial condition and reported Chula Vista has an “exceptionally high” reserve ratio and hidden financial resources.

At a public forum last week, budget analyst Peter Donohue said the city began the 2009 fiscal year with more than $33 million in general fund reserves — about 23 percent of that year’s operating budget. The study claims the city had $154 million in unrestricted net assets at that time.

His report, which also examined the city’s bond rating and internal cost-allocation plan, concluded that Chula Vista has the financial resources to mend its $18.5 million budget hole without cutting public services.

“I wish it were true, but it isn’t,” City Manager Jim Sandoval responded. He said the city’s available reserves are currently at 7.2 percent of this year’s $133 million general fund. Municipalities typically set aside 7 percent to 15 percent of their budgets for unanticipated expenditures and economic downturns.

In June 2009, the redevelopment agency owed the city about $23 million. That outstanding loan amount was included in the General Fund reserves, but it was not available for spending.

“(Donohue) is insinuating those are spendable resources and they’re not,” said city finance director Maria Kachadoorian.

She said the redevelopment agency’s outstanding loan accounts for the difference between city’s calculation of its reserves and Donohue’s estimate. A $10 million repayment from the redevelopment agency was recently used as a one-time source of income to balance Chula Vista’s current budget.

The Chula Vista Police Officers Association paid about $20,000 for the Donohue analysis. Donohue, who has a doctorate in economics from the University of Texas, began examining the city’s finances in November. He said his study does not reflect the most current fiscal reports because those haven’t been released.

“City officials’ refusal to maintain police protection is hard to understand,” his study said. “Chula Vista residents and businesses should question reduced spending on services, including critical public-safety services.”

Donohue said the city has about 150 funds with a total of $154 million in assets, but Kachadoorian said all revenues can’t be lumped into operating costs. The excluded ones include sewer revenues and money from bonds issued for redevelopment.

About 32 police officers received layoff notices in October. A recent agreement between two South County school boards and the Police Department allowed that number to drop to 23 targeted layoffs, about 15 percent of the police force.

Sandoval, the city manager, said that altogether, 101 positions must be eliminated citywide by Jan. 7. “We’ve been through four years of cuts with no impact on public safety,” he said.

Donohue contends that city administrators are overstating the city’s financial difficulties.

“Sometimes jurisdictions have a particular political agenda and the actual numbers don’t support the agenda,” Donohue said. “The sky was about to fall on you guys for a number of years now. It hasn’t yet.”

While ongoing labor negotiations between the city’s two public-safety unions haven’t been successful, the three other employee unions in Chula Vista have agreed to wage concessions. Their pacts include contributing the 8 percent employee share of their pensions, forgoing contractual raises and accepting a less-generous benefits plan for new hires.




Planned service reductions

•Libraries:

Civic Center branch to be closed Sundays and Mondays.

South branch to be closed on weekends.

Eastlake branch to be open only from 5 to 8 p.m. Mondays and Wednesdays.

•Recreation centers:

All the centers to be open only two days a week. Hours will vary.

Loma Verde center to be open Mondays and Wednesdays.

Otay center to be open Tuesdays and Thursdays.

Veterans center to be open Fridays and Saturdays.

Montevalle center to be open Tuesdays and Thursdays.

Other centers’ hours will be available on their websites.

•Parks:

Park-ranger program to be eliminated.

Graffiti-abatement team for private property to be eliminated.

Tree-trimming services provided on emergency basis only.

Custodial services at Rohr Manor and Ranger Station to be eliminated.

Holiday lighting for Starlight Parade and downtown Third Avenue to be cut.